Gold Going for Its Fifth Straight Winning Session
Gold prices hit $1,247 per ounce following a drop in global equities as investors see risk grow in non-gold assets.
Gold, a risk management asset and hedge commodity, has continued to climb since the U.S. Federal Reserve struck a more dovish tone concerning interest rates last week. Now that interest rates are not expected to rise as highly as anticipated, the U.S. dollar has flagged and gold has experienced a resurgence. (Source: “Gold prices try for 5th straight gain, buoyed by a slump in risky assets,” MarketWatch, March 22, 2017.)
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Global equities concerns strengthened bullion alongside the S&P 500 index and the Dow Jones Industrial Average (DJIA), both suffering their worst daily losses in months.
As investors continue to see risk in alternative assets, gold is often the commodity of choice in order to secure against market shifts and inflation. While the U.S. economy is still anticipating larger growth rates than seen in the recent past, the Fed’s speech along with the drop in the Dow and S&P have instead boosted gold prices.
Political unrest is also usually a good indicator of gold demand. As upheaval in the political realm can often bleed over into economics, investors are wary of the instability and flock to gold in order to mitigate that risk.
With the administration of U.S. President Donald Trump saddled with conflict from all sides, the uncertainty of his presidency is negatively affecting the U.S. dollar and, therefore, serves as a boon to gold prices.
Trump faces allegations of Russian ties. High-ranking officials of the Federal Bureau of Investigation (FBI) testified before U.S. Congress about the ongoing investigation into these potential Russia-Trump connections.
Another challenge facing the sitting president is the fight over healthcare. The difficulty in passing legislation in the healthcare sector has had a diminishing effect on confidence that Trump will be able to pass his other promised policies that analysts expected to prop up the economy.
